UAW workers want two-tier gone, seek raises

Melissa Burden and Michael Wayland
The Detroit News

Eliminating the two-tier wage system that automakers used to help boost profits following the recession tops the issues that hourly UAW members want addressed as the union and Detroit's Big Three carmakers head into next year's contract negotiations.

UAW hourly members have and are submitting bargaining resolutions to local unions. And getting rid of the system that pays new hires less in wages and benefits than veteran employees they work alongside is a top concern, according to UAW locals surveyed by The Detroit News.

"Since we've implemented the two-tier, it has absolutely caused a divide among our membership on both sides of the aisle," said Brian Hartman, president of UAW Local 2209 in Roanoke, Indiana. The local represents hourly workers at General Motors Co.'s Fort Wayne Assembly Plant, which builds versions of the Chevrolet Silverado and GMC Sierra trucks. Hartman estimates about 20 percent of the workforce there is entry-level.

The two-tier system and other resolutions are expected to be among the issues UAW President Dennis Williams is likely to address Monday in Detroit, as he sits down with the media for one of the first times since he was elected the union's head in June.

Williams, in a statement to The News, said collecting resolutions is important because the "members' voices drive" the union's decisions — and contract negotiations are no exception.

"Our conversations do not start and stop every four years, but they are ongoing and designed to give UAW members opportunities to have the kind of internal discussions that help us prepare for UAW events that include the upcoming bargaining convention but are not limited to that," he said.

The two-tier and lower-cost wage system, introduced in 2007, has allowed Chrysler Group LLC, Ford Motor Co. and GM to invest billions into U.S. plants and hire thousands of new employees. But those entry-level workers also make substantially less than Tier 1 employees who earn about $27 an hour. Next year, the newer workers will make at least $19.28 an hour, up from about $15.50 they earned in 2011.

About 17.5 percent of GM's hourly workforce is entry-level; approximately 23 percent at Ford; and about 44 percent at Chrysler.

Kristin Dziczek, director of the Industry & Labor Group at the Center for Automotive Research in Ann Arbor, said the upcoming talks will be interesting not only because of the two-tier system, but the workers themselves.

"The second-tier workers, this is the first time we'll see how they vote," she said. "I think that's a very interesting dynamic to all of this."

How the second-tier workers vote could make ratifying contracts more difficult. The second-tier workers rely on bonuses and profit-sharing checks more than the traditional hourly workers. They may not want to lower or see bonuses end in exchange for eliminating or bridging hourly wages between the two pay levels of workers.

The UAW opted for the promise of jobs and annual profit-sharing checks rather than wage hikes during the last round of collective bargaining agreements with the Detroit automakers in 2011.

Since then, automakers have paid billions of dollars to hourly employees — but in annual lump sum payments. For 2013, Ford had the top payout of approximately $8,800 to 47,000 eligible U.S. hourly employees — totaling $413.6 million. Workers may have to choose between a wage increase or the profit-sharing checks, which are dependent on the automaker's North American profits.

For veteran workers who haven't had a pay raise in several years, boosting pay may be more important than profit-sharing payments.

UAW Solidarity House in Detroit.

"We haven't had a pay raise in almost 10 years," said Alec Arce, an electrician at Chrysler's Trenton Engine Plant. "With all the concessions we took, it hit us pretty hard."

Arce and his wife, Robin Arce, who is a machine operator at the plant, want to see a restoration of holiday pay and cost-of-living adjustment pay restored.

UAW Local 598 President Ray Gorney is hopeful the union will address "equal pay for equal work," that the union doesn't have today.

Gorney said the two-tier workers have helped the companies return to profitability.

"At that rate of pay you can't raise a family, buy a home, drive a decent car," Gorney said.

Hartman, workers and other officials said some union members also want to secure overtime after eight hours in a day, instead of after 40 hours in a week; ensure all hourly employees have a defined pension that pays out a predetermined monthly amount to retirees (entry-level workers don't have a defined pension); and see temporary workers hired after 90 days. The defined benefits could be a controversial point, as automakers in recent years have attempted to slash defined benefits, which are looked at as poison on a balance sheet.

The 2015 contract talks are the first since 2007 in which workers at GM and Chrysler have the right to strike; the UAW gave up that right for the 2011 talks as a condition of the government bailouts of GM and Chrysler. It's also the first contract that will be negotiated since Michigan enacted a Right to Work law that would allow hourly employees to opt out of union dues and membership — which may add pressure on the union to prove especially to some Tier 2 workers that it is giving them some bang for their buck.

Williams previously told The News that Right to Work isn't necessarily a focus for him. He said the union has been successful in retaining the vast majority of its members in other states with the laws: "I've always believed that if you do your job representing people, that people will be there to support you," he said.

GM spokesman Bill Grotz would not comment directly on issues union workers may be raising ahead of upcoming negotiations. The current contract expires in September.

"We're committed to working with our union partners to enable the company's long-term success for the business and our employees," Grotz said.

In a statement, Ford Motor Co. said it "has a longstanding history of working collaboratively with the UAW ... . In 2015, we look forward to continuing our strong UAW partnership as well as negotiating a fair and competitive labor agreement."

Chrysler CEO Sergio Marchionne has said the two-tier wage system is not a good long-term approach.

"I think that the Detroit Three companies are going to look for continued restraint in overall labor costs and things that are more flexible and contingent will be their demands," Dziczek said. "Things that will raise cost will be difficult with the companies."